Friday, June 16, 2017

In the first part of this article, the remarkable 26% CAGR that the latest Cisco VNI report is predicting for 2017-2021 was noted. A 26% CAGR is steep in any field let alone the already massive Internet that exists today. Perhaps the most important observation was that the growth rate is accelerating. This part will look at some of the shifting patterns for Internet traffic as seen in the study. Here are the key observations for this part of the article: (1) Traffic is moving closer to the edge; (2) regional traffic trends are uneven; (3) business continues to invest in ways to segment traffic from the public Internet and that the fastest such area of growth is SD-WAN.

Moving toward the edge

With the widespread availability of content delivery networks (CDNs) and related caching technologies, the volume of IP traffic traversing long-haul networks should be declining. Much of this traffic growth is video. In fact, the Cisco VNI study predicts that video will represent 80% of all Internet traffic by 2021, up from 67% in 2016. Globally, there will be nearly 1.9 billion Internet video users (excluding mobile-only) by 2021, up from 1.4 billion in 2016. Much of this content works well in a CDN. However, currently there are a handful of super-sized Internet content providers (ICPs) that are operating a fairly small number of hyper-scale data centres. Facebook, for instance, serves over a billion daily users, with major European data centres located near the Arctic Circle in Luleå, Sweden. Because Facebook feeds are customised for user, each session for European users pretty much ensures that traffic is traversing the core network and long-haul backbone. The story is pretty much the same for AWS, Google and Microsoft. However, each of these ICPs is undergoing a rapid build-out of data centres, meaning more facilities closer to users. By late 2018, Facebook should have three European data centres in operation (construction of two new Facebook data centres is underway in Clonee, Ireland and Odense, Denmark). By 2021, it is likely that Facebook could have five or six European data centres. This alone would redirect significant traffic off the long-haul network to northern Sweden and onto more regional networks.

Below are some key Cisco VNI findings:

·End-user Internet traffic is moving closer to the edge; over one-third of traffic will bypass core by 2021.

·Globally, 35% of Internet traffic will be carried metro-to-metro by 2021, up from 22% in 2016.

·Globally, 23% of Internet traffic will be carried on regional backbones (without touching cross-country backbones) by 2021, compared to 20% in 2016.

·Globally, 41% of Internet traffic will traverse cross-country backbones by 2021, compared to 58% in 2016.

The second observation is that regional differences in IP traffic growth will remain with us in 2021 and likely for more years in the future. Even though the latest mobile phone models somehow spread to cities all around the world remarkably fast, global economic development is uneven and network infrastructure reflects it. By 2021, 5G rollouts will be underway in many countries with robust economies but will come later to others. The figures gathered by the Cisco VNI, show the APAC region leading with the greatest IP traffic load by 2021, North America follows, but with a much smaller population compared to APAC, per capita bandwidth intensity remains highest in North America. The Cisco VNI figures, specifically regional IP traffic growth 2016 – 21, show:

The latest Cisco VNI report also predicts that global business IP traffic will grow at a CAGR of 21% from 2016 to 2021. Since this figure is based on current metrics from Cisco's service providers (as well as other sources as discussed in the study’s methodology), it is clear that networks are filling up and that they are doing so at an accelerated rate. More businesses are sending/receiving traffic to the Internet, mostly likely due to increased use of video and accessing cloud services over the public Internet. Cisco expects advanced video communications in the enterprise segment to cause business IP traffic to grow by a factor of 3 between 2016 and 2021.

The Cisco VNI report has a separate category for IP WAN, which is predicted to grow at a CAGR of 10%, compared with a CAGR of 20% for fixed business Internet and 41% for mobile business Internet. This category could include Layer 2 and VPN services. Increasing numbers of service providers are offering direct connection options for AWS and Microsoft Azure, and as the general movement of corporate data into the public clouds increases, one would expect that the traffic load on these private connections to grow substantially. However, Cisco is predicting business IP traffic in North America to grow at a CAGR of 23%, a faster pace than the global average of 21%. In volume terms, in Asia Pacific will have the largest amount of business IP traffic in 2021, at 17 EB per month, with North America second at 14 EB per month.

One area of intense activity now being tracked by Cisco VNI is global enterprise SD-WAN traffic, which is now predicted to grow at a CAGR of 44% compared to 5% for traditional WAN. Cisco predicts that SD-WAN will increase six-fold over the forecast period and represent 25% of WAN traffic by 2021. This is good news for Cisco, given that it recently agreed to acquire Viptela, a start-up specialising in SD-WAN, for $610 million in cash and assumed equity awards. Cisco's SD-WAN portfolio also includes its home-grown intelligent WAN (Iwan) solution and Meraki cloud platform.

Nokia and telco Spark announced a partnership to prepare networks in New Zealand for future demands arising from the move to 5G, ultra-broadband and IoT services through upgrading the capacity, flexibility and agility of Spark's national core and backhaul IP/MPLS network.

Spark, which serves around 2 million residential customers as well as businesses, stated that it is committed to making New Zealand a leading country in the adoption of 5G, and noted it has experienced a ten-fold increase in network traffic following the introduction of its broadband over wireless service, which is based on a Nokia IP/MPLS network. As part of this effort, the operator plans to expand the capacity and flexibility of its transport network over the next two years in preparation for 5G.

The company noted that the adoption of 5G will also help to meet the national government goal of extending broadband services in rural areas, as well as helping it to reduce the costs of delivering broadband services.

The upgrade project with Nokia specifically covers a 3-year strategic partnership through which the vendor will supply advanced IP and optical networking equipment and software, including the new Nokia 7250 Interconnect Router R6 (IXR-R6)platform.

The 7250 IXR-R6 solution is designed to address key requirements relating to traffic growth and major architectural changes to support the transition towards 5G. The platform features terabit capacity and high-port density in a compact, ruggedised form factor. Nokia's 7250 IXR-R6 also offers security features and a range of interconnectivity options, including legacy SDH/SONET and latency-sensitive Ethernet for next-generation fronthaul interface (NGFI).

The 7250 IXR-R6 is designed to enable the cost-effective transport of latency-sensitive and 'bursty' traffic, making it suitable for the delivery of both ultra-broadband and future IoT-based services.

Nokia noted that this latest agreement with Spark follows the operator's launch of 200 Gbit/s per-wavelength connectivity utilising its PSS1830 Optical Transport Network platform last year. For that project, Spark deployed what was claimed as the country's first 200 Gbit/s per-wavelength production fibre link to connect its core network with its global gateway using Nokia's PSS1830 OTN.

Montreal-based eStruxture Data Centers, a new network and cloud-neutral data centre operator, has announced the development of its Canada-wide platform, designed to meet the growing demand for large, energy efficient data centres that is being driven by the adoption of cloud services and demand for data storage within Canada.

The company stated that it has raised an initial C$80 million in capital through a funding round led by Canderel and Caisse de dépôt et placement du Québec. The funding will be used to expand its footprint across Canada, both through the acquisition of existing data centre operators and new data centre development.

As part of this growth strategy, eStruxture also announced the completion of its first acquisition with the purchase of the assets of Netelligent Hosting Services, a major data centre operator in Montréal.

Netelligent provided colocation, cloud, managed services and bandwidth to more than 850 customers and had developed a cloud-neutral ecosystem that allowed customers to access diverse private and public cloud providers. The acquired downtown data centre facility enables eStruxture to offer customers high-density power of up to 30 kW per cabinet.

eStruxture was established to provide network and cloud-neutral data centre solutions designed to offer the capacity, performance and flexibility required for demanding enterprise applications. The company offers colocation, private cloud, managed services, bandwidth and security and support services to customers of all sizes.

eStruxture is led by president and CEO Todd Coleman, who co-founded Cologix, where he also served as COO. Mr. Todd has held a number of senior positions at companies including Level 3 Communications, where he held the roles of SVP of Data Centers, SVP of Media Operations and president of Level 3 Communications Europe.

CenturyLink has announced the availability of CenturyLink Managed Enterprise with Cisco Meraki, a new service designed to enable customers to more efficiently deploy and monitor WiFi networks, security, wireless, phone, video surveillance and SD-WAN services using a single administrative dashboard.

Based on products from Cisco Meraki, the managed solution allows single- or multi-site customers to utilise CenturyLink for the provision of components including devices, licenses, connectivity, management and support.

The new solution is designed, configured, monitored and maintained by CenturyLink and offered with fixed, monthly per-device pricing. Customers can select from the available components when initially ordering the solution and subsequently add or remove components as needed.

The new managed Meraki solution is designed to be integrated with other CenturyLink offerings such as Managed Office, Fiber + and Location-Based Analytics, a fully managed customer engagement solution that provides businesses with insight into real-time data and helps them to create more personalised services leveraging analytics and marketing tools.

CenturyLink Managed Enterprise with Cisco Meraki is also available to CenturyLink Alliance program partners. The company plans to extend availability to international customers later in the year.

CenturyLink introduced its Location-Based Analytics mobile engagement, analytics and marketing solution for use by operators in locations where customers congregate in 2016. The solution leverages the CenturyLink Managed WiFi solution that features Cisco Meraki WiFi access points and security appliances and is designed to enable high speed connectivity and reliable coverage for equipment sensors and mobile devices.

ZTE and China Mobile Quanzhou Branch announced that they have completed the commercial deployment of 3D-MIMO, also termed Pre5G Massive MIMO in the city of Quanzhou in Fujian province.

ZTE stated that with 16 commercial terminals connected, the single-carrier downlink peak cell rate has been increased to 730 Mbit/s, with a single-carrier 16-stream downlink peak rate using 3D-MIMO of up to 700 Mbit/s achieved. In addition, a three-carrier rate of up to 2.1 Gbit/s was achieved. ZTE claims that these speeds mark a record for a commercial environment, and build on three-carrier, 8-stream downlink rate with 3D-MIMO of 1 Gbit/s, also working with China Mobile.

ZTE explained that using the key 5G technology massive MIMO on the same bandwidth, 3D-MIMO base stations are able to deliver a peak throughput 7x higher than existing 4G macro stations, enhancing services and enabling reliable video transmission.

Quanzhou Mobile and ZTE noted that they have commercially deployed 3D-MIMO in 'big video' environments and verified the peak cell rate, representing a milestone towards the commercialisation of massive MIMO technology. The partners plan to continue to work together to expand the 5G-like Internet experience to more end users.

China Mobile and ZTE stated that they have been jointly developing and verifying 3D-MIMO technology since 2015, and in 2016 conducted 3D-MIMO pre-commercial verification in 50 cities across 29 provinces of China. The new-generation 3D-MIMO product is claimed to be suitable for engineering installation in macrocell and hotspot scenarios. The product provides support for multiple bands (3.5, 2.6 and 2.3 GHz), multiple carriers and multiple bandwidths and can be integrated with existing networks.

ZTE's Pre5G strategy is based on applying key 5G technologies such as massive MIMO to existing commercial 4G networks, as well as the enhancement of LTE-A Pro technologies within a 3GPP architecture via technology such as carrier aggregation (CA), unified delivery network (UDN), 256QAM, licensed assisted access (LAA), LWA (LTE and WLAN aggregation) and NarrowBand IoT (NB-IoT). ZTE claims that to date its Pre5G-related solutions have been deployed on over 60 networks in 40 countries.

Verizon Communications announced the completion of its acquisition of the operating business of Yahoo!, and that it has combined these assets with its existing AOL business to create a new subsidiary, Oath, comprising more than 50 media and technology brands worldwide.

Verizon acquired the Yahoo! operations for approximately $4.48 billion through an agreement originally announced in July last year. Closing of the agreement was delayed as the companies assessed the effect of two data breaches disclosed by Yahoo! after the transaction was announced. The agreement originally value Yahoo! at approximately $4.8 billion in cash.

As a subsidiary of Verizon, Oath will focus on building its brands. The company reaches over one billion people worldwide, offering a group of over 50 media and technology brands. The new Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, BUILD Studios, Yahoo Finance, Yahoo Mail.

The business, part of Verizon's Media and Telematics organisation, will be led by Tim Armstrong, former CEO of AOL. Mr. Armstrong has been leading integration planning teams since the Yahoo transaction was announced in July 2016.

Tim Armstrong is also leading efforts to continue to build an advanced and open advertising technology solutions, with brands such as ONE by AOL and BrightRoll spanning mobile, video, search, native and programmatic ads.

Verizon stated that following the changes to former Yahoo! CEO Marissa Mayer's role with Yahoo as a result of the closing of the transaction, Ms. Mayer has resigned from the company.

Commenting on the transaction, Marni Walden, president of Media and Telematics, said, "The close of this transaction represents a critical step in growing the global scale needed for Verizon's digital media company... the combined set of assets across Verizon and Oath, from VR to AI, 5G to IoT, from content partnerships to originals, will create new ways to (address) audiences globally".

In April this year, Verizon announced it would adopt a new operating structure focused on three areas: Media and Telematics, Network and Technology, and Customer and Product Operations.

Verizon also announced the appointment of: Marni Walden as EVP of the Media and Telematics business; Hans Vestberg, former CEO of Ericsson, as EVP of the new Network and Technology operation; and John Stratton as EVP of the Customer and Product Operations unit.

Orange SA is perhaps the global carrier with operations in the most diverse geographies and cultures. From its headquarters in Paris, Orange (formerly France Telecom) now serves 265.162,000 subscribers worldwide with mobile, broadband, fixed telephony, TV and a range of advanced enterprise services. In Part 1 of this series, the company's recent performance indicators were covered; in Part 2 the two growth segments, Africa and mobile money, were profiled. Part 3 will cover Orange's innovation activities and growth opportunity in Spain.

The inertia of incumbency

By any measure, Orange is enormous. With 155,000 employees supporting 265 million customers in 29 countries, the management challenge of guiding such a large enterprise must be considerable. Like many formerly fully-state owned, incumbent, fixed line operators, the former France Telecom has a certain inertia due to its heritage and ongoing regulatory and social obligations. Earlier this year, Orange reached a labour agreement with the main trade union representing it workers in France. The contract provides an average wage increase of 2.3% and offers some special incentives to support young employees who have joined the company in recent years. Orange has about 95,000 employees in France.

Given the large employee base, it may seem incongruous to think of Orange as an innovation leader, but this has clearly been the ambition of the company's management for many years. Of course some of the company's history coincides with pioneering telecommunication technologies that were developed in France. The Minitel comes to mind - the iconic online videotext service that scaled to millions of terminals across France in the years before the Web. France Telecom officially retired the Minitel service in June 2012. Today, Orange has approximately 650 employees directly in the R&D programmes and the company is involved in 100 research partnerships with universities and public laboratories in France and abroad.

Looking for start-ups

Orange Fab is the company's international accelerator or start-ups. The program, launched in 2013 and now active in 14 countries, creates commercial partnerships between chosen start-ups and business units inside of Orange. It functions as a launch pad by providing business advice as well as local and international visibility. The latest location for an Orange Fab is Belgium/Luxembourg, where the company hopes to cultivate specialists in Big Data, AI, IoT and all the hot topics of the industry. To date, Orange Fab has contributed to the development of nearly 250 start-ups worldwide.

In April, Orange and Facebook kicked off a program designed to support start-ups focused on network infrastructure development. Orange, a member of the Telecom Infra Project (TIP) initiated by Facebook, said this new partnership would identify and support start-ups focused on network infrastructure technology. The Orange Fab, France Telecom Track accelerator, will support and guidance from experts at Orange, TIP and Facebook, as well as facilitate collaboration and investment opportunities. The project is managed through Orange Fab France, Orange's established accelerator program for start-ups located at the Orange Gardens campus in Paris.

Expansion on its southern border

Outside its home market, Spain is perhaps the most important region of focus for Orange, where the company has the ambition to reach 14 million connected homes by the end of 2019 - a major incursion into Telefonica’s home market. Already, Orange has more fibre-connections in Spain than it does in France. Currently, a total of 21.5 million households had fibre connectivity across the group's footprint at the end of March 2017 (up 53% year on year), of which 10.0 million were in Spain, 7.4 million in France, 2.1 million in Romania (following the cross-network-sharing agreement with Telekom Romania), 1.7 million in Poland and 352,000 in Slovakia.

In Spain, despite heavy discounting from competitors since last December, Orange's overall Q1 2017 revenue grew by 8.5%, suppressing the 7.9% the group achieved in Q4 2016 and more broadly over the full year 2016 where Orange widely over performed its two closest competitors. Mobile revenue accelerated to more than 8%, driven by a 5.4% growth in the contract base, and 4.6% growth in mobile quarterly ARPU, supported by recent service upgrades, the latest on the Jazztel brand and on the Orange brand. The company also reported strong results for commercial sales in both fixed broadband with 196,000 net fibre sales for the quarter (1.806 million fibre customers at March 31, 2017) and mobile contracts with 119,000 net sales.

As of the first quarter of 2017, Orange Spain had a total of 8.2 million customers. The contract customer base grew 3.2% year on year to 11.297 million customers and the quarterly ARPU of contracts rose 4.0%. Growth was also significant in mobile services provided to other carriers, in particular the growth of MVNOs and network sharing. Fixed services rose 7.5% in the first quarter, led by continued strong revenue growth in fixed broadband (up 8.5%). Fixed broadband had 4.2 million customers at the end of March (up 5.4% year on year), and quarterly ARPU rose 3.0%. TV services also rose rapidly, with 537,000 customers at the end of March, led by the success of content offers and notably the broadcasts of football championships.

In 2015, Orange acquired Jazztel, a network operator offering broadband and triple play services in Spain, for approximately Euro 3.4 billion. With Jazztel, Orange's fibre network reached 9.6 million connectible homes as of December 31, 2016. A joint investment agreement with MasMovil in July 2016 established the second largest fixed high-speed network. The latest figures from Q1 2017 show the incumbent, Movistar (Telefonica), losing some 25,000 subscribers, while Orange, MasMovil and Vodafone each gained subscribers.

Orange SA is perhaps the global carrier with operations in the most diverse geographies and cultures. From its headquarters in Paris, Orange (formerly France Telecom) now serves 265.162,000 subscribers worldwide with mobile, broadband, fixed telephony, TV and a range of advanced enterprise services. In part 1 of this article, we looked at the company’s recent performance indicators. Part 2 discussed two growth segments for Orange: Africa and mobile money; Part 3 discussed the spirit of innovation inside Orange and its growth in Spain. Part 4 will examine forward-looking aspects of the carrier’s network architecture, especially SDN and NFV, which will be critical to building a fully-integrated, global super-carrier infrastructure. These platforms are being deployed by Orange Business Services (OBS) now, putting the carrier ahead of many industry peers.

An early mover with network virtualisation

Orange Business Services (OBS) delivers the company's enterprise portfolio over networks deployed by the group (fibre, 4G, WiFi, software defined networking). It is a truly global operation with 21,000 employees in 220 countries and territories. Orange's international IP transit network, which it calls the Open Transit Internet (OTI) network, has 24 major PoPs (12 in Europe, two in Asia, eight in North America, one in Africa and one in the Middle East); interconnects between these major PoPs run at up to 100 Gbit/s. By mid-2016, Oranges says peak traffic loads reached 4.2 Tbit/s across its OTI.

In the red-hot sector of SDN, NFV and SD-WAN, Orange has indicated on various occasions that it has been developing its own technology. Orange is a leading player in industry standards organisations and several vendor partnerships have been announced. When it comes to building the next layer of network virtualisation, the carrier has played a key role. Orange was a founding member of the network functions virtualisation (NFV) initiative that became an Industry Specification Group (ISG) within the European Telecommunications Standards Institute (ETSI) in 2013. A key research partnership was formed with France’s the National Institute of research in Computing and Automation (INRIA) in 2015, leading to the creation of <I/O Lab>, a joint research laboratory for virtualisation, network convergence and cloud computing.

In March 2015, Orange Business Services launched an early pilot deployment of virtualised network functions for small and medium enterprises (SMBs). The pilot enabled SMBs (with up to ten sites) to test an SDN-enabled system that lets users manage their Intranet and Internet service in real-time. Users could order and customize new virtualised application services of their choice: Internet content filtering, advanced security and anti-virus. Orange used its own SDN controller to managed the virtualised services.

In mid-2016, Orange and AT&T agreed to collaborate on SDN and NFV. Later, it emerged that Orange would become the first carrier to test AT&T’s Enhanced Control, Orchestration, Management and Policy (ECOMP) platform. AT&T’s ECOMP has since been merged into the Open Network Automation Platform (ONAP) project under The Linux Foundation of which Orange is a platinum member.

Orange has also been working with MEF and TM Forum to release the first set of standard application programming interfaces (APIs) for orchestrated Carrier Ethernet services later this year. This initiative uses MEF's LSO (Lifecycle Service Orchestration) framework and TM Forum's Open API framework to enable SDN architectures from different network service providers to interoperate with each other. There are plans to standardize 8 API definitions. This builds on the industry-agreed Open APIs developed by TM Forum members. Various other carriers are also part of this initiative, including AT&T Colt Technology Services, Comcast, Level 3, PCCW Global, TI Sparkle and Verizon.

In November 2016, Orange Business Services officially launched its Easy Go Network, which provides fully-virtualised network functions (VNF) using SDN, in 75 countries by the end of 2016. The Easy Go Network service, which underwent a year-long trial with customers, allows enterprises to instantly provision VNFs for branch offices with full digital self-service ordering, customer care and reporting functions. The service includes a plug-and-play router on site, eliminating truck rolls for more flexibility and rapid deployment. Orange says the key benefits of its Easy Go Network is that the service is on-demand and fully flexible with no upfront investment and no minimum revenue commitment. Billing is offered under a month to-month contract.

In March 2017, Orange Business announced plans integrate Riverbed SteelConnect technology into its hybrid network portfolio. The two companies are working together to develop a virtual network function (VNF) that customers will be able to deploy on universal customer premise equipment (uCPE) at their site. Full compatibility will be maintained with existing services as enterprises transition applications to the cloud. Riverbed said its SD-WAN offering, SteelConnect, provides an intelligent and simplified approach to designing, deploying and managing hybrid networks. Application performance is improved by real-time routing using the optimum links available between different networks. SteelConnect also enables zero-touch provisioning, allowing enterprises to set-up global networks quickly with easy management, providing a cost effective and superior end user experience. The first Orange pilot customers will be connected during the second quarter 2017 using managed SteelConnect appliances. The VNF of the service is scheduled to be available at the end of 2017. This will provide full virtualisation and orchestration managed through an easy-to-use ‘self-care’ portal to administer and prioritise applications.

Easy Go brings integration opportunities

For many years, Orange Business Services has been delivering MPLS WAN services for multinational with operations throughout the globe. Often, these have been complex WAN solutions that integrate all an organisation's voice, video conferencing and data communications with QoS provided for mission-critical applications. For instance, OBS manages a private cloud on behalf of the European Space Agency, linking eight sites across the continent over a converged IP/MPLS infrastructure. Another such high-profile project is the private IP/MPLS network that OBS manages on behalf of the European Commission, linking more than 250 sites across all EU member nations.

With SD-WAN, OBS now has the possibility of integrating access from other carriers. In May, OBS signed a four-year contract with Heraeus, a leading technology group headquartered in Hanau, Germany to centralize all services on a homogenous and stable network linking Heraeus' 110 locations around the world. Under the contract, Heraeus will unify all services currently provided by almost 100 different providers under Orange Business Services. While the announcement did not specify which WAN technologies would be put to use, it is likely that the new SD-WAN implementation will be employed in locations where an IP/MPLS node is not viable either from a local access perspective or simply for economics.

It should be noted that while many carriers may offer virtualised network services such as Easy Go, Orange continues to operate a very significant fibre network both in Europe and internationally (18,000 km), not to mention one of the largest IP/MPLS backbones and conventional VPN services for multinational organisations.

Since the earliest days to telecom, the group has been involved in long-haul cables. Currently, Orange is involved in over 40 undersea fibre cables and consortia projects representing some 450,000 km of fibre cables. One such project is the recently commissioned SE-ME-WE5 cable linking Marseille to Singapore. Orange was one of the lead consortium members.